NEGOTIATIONS
PROCESS
KEY DOCUMENTS
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Review of the financial mechanism
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Introduction
The Conference of Parties (COP), at is fourth session, decided to review the financial mechanism
of the Convention every four years in accordance with Article 11.4 of the Convention. The annex to
 decision
3/CP.4 (153 kB) containing the guidelines states that the objective of the review of the
financial mechanism is to take appropriate measures regarding:
(a) Its conformity with
the provisions of Article 11 of the Convention;
(b) Its conformity with the
guidance of the COP;
(c) The effectiveness of the
activities it funds in implementing the Convention;
(d) Its effectiveness in
providing financial resources on a grant or concessional basis, including for the transfer
of
technology, for the implementation of the Convention's objective on the basis of the guidance
provided by the COP; and
(e) Its effectiveness in
providing resources to developing country Parties under Article 4.3 of the Convention.
Three reviews of the financial mechanism of the Convention have been conducted in the past, and the
fourth review is currently underway, to be completed at COP 16.
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Recent Developments
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At its 12th session, the COP requested the SBI to initiate the fourth review of the financial mechanism
in order to complete it by COP 16. By its decision
6/CP.13 (265 kB) , the COP adopted additional guidelines for the review of the financial
mechanism. The annex to decision
6/CP.13 (265 kB) states that the additional objective of the review of the financial mechanism
is to examine how to facilitate consistency in financing activities and improve the complementarity of
the financial mechanism with other sources of investment and financial flows, including:
(a) Examining relevant sources
and means of financing, as indicated in Article 11, paragraph 5 of the Convention, that
would assist developing countries to contribute to the achievement of the objective of the Convention,
in particular
innovative means of financing, such as for the development of endogenous technologies in developing
countries;
(b) Examining the role of
the financial mechanism in scaling up the level of resources; and
(c) Assessing enabling
environments for catalysing investment in, and the transfer of, sustainable technologies that
mitigate greenhouse gas emissions, and for enhancing resilience to climate change.
By the same decision, the COP also requested the SBI to recommend a draft decision on the fourth review
of the financial mechanism for adoption by COP 15. The SBI considered this request at its 30th and 31st
sessions but was unable to complete its work on this matter.
The COP therefore, by its decision
6/CP.15 (391 kB) , requested the SBI to continue its consideration of this issue at its 32nd
session, with a view to recommending a draft decision for adoption by COP 16. In line with this, the
SBI considered this issue at the 32nd session where, in the context of the fourth review of the
financial mechanism, it requested the secretariat to compile and synthesize the information contained
in the reports of the eleven countries participating in the National Economic, Environment and
Development Study (NEEDS) for Climate Change Project, for consideration by SBI 33.
At its 33rd session, the SBI continued its consideration of this item and recommended a draft decision
completing the fourth review of the financial mechanism, which was subsequently adopted by COP 16
( decision
2/CP.16 (21 kB) ).
In their decision finalizing the fourth review, Parties decided, inter alia, the following:
- Taking note of the Fourth Overall Performance Study of the Global Environment Facility (GEF);
- Welcoming the successful negotiations of the fifth replenishment of the GEF and noting this is
the largest increase in the climate change focal area since the GEF was established;
- Requesting the GEF to continue improving its modalities to increase the responsiveness,
effectiveness and efficiency of its support;
- Deciding that the GEF should continue to provide and enhance support for the implementation of
adaptation activities through the Least Developed Countries Fund and the Special Climate Change Fund;
- Inviting Parties to submit to the secretariat annually their views and recommendations on
elements to be taken into account in developing guidance to the GEF; and
- Requesting SBI 37 to initiate the fifth review of the financial mechanism and to report on its
outcome to COP 19.
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Updated 4 April 2011
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Latest Documents
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Synthesis report on the NEEDS Project. Note by the secretariat.
FCCC/SBI/2010/INF.7
Submissions by Parties on the operation of funds under the Global Environment Facility as an operating
entity of the financial mechanism, as well as the Special Climate Change Fund and the Least Developed
Countries Fund.
FCCC/SBI/2009/MISC.10
and FCCC/SBI/2009/MISC.10/Add.1
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